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South Africa

Where the recipient, from outside South Africa, removes or arranges for the removal of goods purchased in South Africa, the export is regarded as an ‘indirect export’. The supplier must generally charge VAT at 14%, but may elect (subject to certain requirements) to zero-rate the supply where the supplier accepts the responsibility to ensure that the goods are delivered to a ‘designated commercial port’ from where they will be exported by the purchaser.


Services physically rendered outside South Africa are zero-rated.

Services supplied to a nonresident are zero-rated, except where the services are:

  • rendered directly in connection with land in South Africa;

  • supplied directly in connection with movable property in South Africa, except where the property is exported after the services have been rendered or the services are rendered in connection with movable property supplied by the nonresident to a vendor in South Africa;

  • supplied directly to the nonresident or any other person who is in South Africa when the services are rendered; or

  • in connection with a restraint of trade relating to an enterprise in South Africa.

Refunds to foreigners

Where foreigners purchase goods in South Africa, VAT will (generally) be charged at 14%. If all requirements are met, a qualifying purchaser (i.e. a non- South African resident, tourist, foreign enterprise or foreign diplomat) may claim a refund from the VAT Refund Administrator (VRA). The purchaser

must remove the goods from South Africa within three months. The refund request must be received by SARS within three months after the date of export.

The general rule is that a supply takes place when an invoice is issued or any payment of consideration (excluding a deposit) is received, whichever is the earlier.

Various special time of supply rules apply, for example:

rental agreements and service agreements providing for periodic payments – when each payment becomes due or is received;

goods supplied progressively or periodically and construction services – when each payment becomes due or is received, or invoice is issued, whichever is the earlier;

instalment credit agreement – when the goods are delivered or any payment is received, whichever is the earlier;

fixed property – when registration of transfer is effected in the Deeds Office, or any payment is made, whichever is the earlier;

coin-operated machines – the time of supply for the for supplier is when the coin or token is taken from the machine, and the time for the recipient is when the coin or token is inserted into the machine.

A ‘foreign enterprise’ is a business that is carried on continuously or regularly by any person (including South African passport holders) outside South Africa. The foreign enterprise must submit appropriate evidence in the form of a trading licence as well as a letter of authorisation from the foreign enterprise authorising the specific person who exports the goods to claim a refund on behalf of the foreign enterprise.

Place, time and value of supplies

Place of supply

In line with the destination-based principle, the VAT Act aims to tax only consumption within South Africa, by allowing zero-rating for exports of goods and services rendered to nonresidents.

However, as the VAT Act does not contain specific place of supply rules, uncertainties and disputes have arisen as to when foreign enterprises making supplies in South African, e.g. by way of local agents or the internet, must be registered as vendors in South Africa. However, the Minister of Finance has announced that the introduction of place of supply rules is being considered.

Value of supply

The general rule is that the value of a supply is the consideration (price) paid for the supply. As all prices must include VAT, ‘consideration’ is a VAT- inclusive concept:

Time of supply

  • Consideration = value + 14% VAT;


The time of a supply generally determines in which tax period output tax must be accounted for and input tax may be claimed, although the vendor’s VAT accounting basis (invoice basis or payments basis) may also affect the timing of accounting for VAT.

  • VAT = consideration x 14/114.

Various special rules apply, for example:

  • supply to a connected person for less than the open market value of the supply, where, had a

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